How Real Estate is Purchased in Colorado

Here is my picture.

Obviously, I represent people who want to invest in Colorado real estate.

I am licensed for all brokerage functions including the listing of homes for sale, however it has been my personal choice to focus on the representation of buyers, and here is why.

Every state has a different method of addressing these issues, so please come into this story knowing that it is different everywhere and also that Colorado herself has adopted different methods in the past. If you have not purchased a home within the past few years, then the rules have changed, and here is the update that you need to keep your information current TO DATE. This is not to say the state legislature is not undoing this, as I write, so please keep that in mind as well.

FIRST, all of the information that any consumer needs is set forth on the Colorado Department of Regulatory Agencies which includes oversight over the Division of Real Estate itself. All the contracts are online, all the details about who the licensed brokers are and where they can be located, whether they have ever had a Ding on their license -- everything is on that website, so please check it out as it was WRITTEN FOR YOU.

SECOND, the purchase of real estate used to be like a used-car lot. You knew when you called in, that the person was SELLING A CAR. Nobody represented you, unless you paid someone from your shop to preview it, or had your boyfriend or father along. THIS IS NOT THE CURRENT METHOD, instead it is this:

A. You are entitled to your own advocate broker, under a written contract whereby a licensed broker such as myself is required to advance your own interests in opposition to those of the seller; and

B. If you do not have a written contract with a buyer agent, you will not receive advocacy in the transaction, PERIOD. Instead you will receive one of these two flavors of document and other handling:

(1) You are a CUSTOMER only, the broker represents the SELLER and owes you no duties except those defined by law.
(2) You are being assisted by a TRANSACTION BROKER, who owes duties of advocacy to NEITHER PARTY but is obligated to "play fair" under rules again prescribed by statute. This same PERSON will be the Listing Agent if you called the number on his or her sign, and BECAUSE OF YOU, he has become a Transaction Broker and IS NO LONGER THE SELLER'S OWN AGENT nor is he or she YOURS.

Insofar as commissions, the Seller or may not pay less, when this transformation (from Seller Agent to Transaction Broker) occurs under the Listing Contract by a checkmark choice on that form, and that is one of your MYOB things between those parties. As a Buyer you care only whether your own assistant (Transaction Broker or full-fledged Buyer Agent) is being paid by the Listing Agent so that you don't have any concerns it will be YOU who pays, and that is set forth BY CONTRACT and in writing, as opposed to some "mysterious side agreement" instead.

Critically, THE CHOICE OF WHETHER YOU WILL BE TREATED AS A "CUSTOMER" OR ASSISTED BY A "TRANSACTION BROKER" INSTEAD, IS NOT YOURS BUT RATHER, HAS ALREADY BEEN MADE FOR YOU! by a check-mark made in the LISTING CONTRACT between the SELLER AND THE LISTING BROKER. In completing the Listing Contract, the Seller IDENTIFIES how his own broker will deal with buyers without a separate Buyer Broker or a Buyer Agent serving under a written contract, such that PROSPECTIVE BUYERS DO NOT CONTROL THAT CHOICE INSTEAD except through their having pre-determined to work with a Buyer Broker of their own, and if their choice is advocacy of their own position, then a Buyer Agent UNDER WRITTEN CONTRACT.

Notice that the word "Broker" is not the same as "Agent" and you will get the Idea that the state legislature is trying to get across: only AGENTS have duties of advocacy, while Transaction Brokers assist instead without "campaigning" for one of the "sides." Obviously your chosen advocate needs to also choose to take on those duties, so a written agreement is required in this state at this time.

C. If you are a customer, all of the commission will be paid to the listing agent who represents the Seller. This is true also, if the same Transaction Broker has assisted both parties.

D. If you have a separate broker, whether a Buyer Agent or Transaction Broker, you do not (BUT MAY AGREE TO OTHERWISE BY CONTRACT!) typically pay the buyer agent (or transaction broker) directly or by yourself. Instead the fee for that second broker is already calculated into the purchase price ALONG WITH ALL COMMISSIONS to the listing broker, that will be paid out of closing TO THE LISTING BROKER who will then pay the buyer broker according to the terms of the LISTING CONTRACT itself and also, the terms of MLS agreements between and among brokers using that private database system.

AGAIN: the choice of the percentage that your own broker will receive, is SET UNDER THE LISTING CONTRACT but subject to your OWN CONTRACT WITH YOUR BROKER if unacceptable to your broker OR YOURSELF.

It is critical that you DO NOT SPEAK to any licensed real estate broker, unless and until you know whether that person represents the Seller, represents nobody, or represents YOURSELF. It is so easy to exclaim "OMG This place is fabulous and so underpriced!" without knowing that the person you are exclaiming to is under contract with the duty to the SELLER of that place or some other place you will be touring next.

The long and short of it is that the consumer is short-changed by not securing a Buyer Agent in writing, and while it would naturally advance my own business plan for the dispensation of this information to result in additional clients for myself -- that is not why it is being posted.

Instead, the Colorado public is entitled to understand these facts in detail, and it should not be necessary to attend a HUD seminar or other public meeting, when the information is readily at hand although not particularly well explained by those most intimately involved in the transactions, who are by law to give you a BROKERAGE DISCLOSURE of WHO they represent, if anyone, BEFORE YOU EXPRESS CONFIDENTIAL INFORMATION.

Confidential Information may consist of a statement so short as this one: "I was just hired by the Martin Co and need a place to live." In that simple statement, I have gleaned plenty about you from your education to your likely earnings and your urgency of moving nearby (there are not many places nearby either, and I know that too) so if I am NOT wearing an exclusive buyer agent tag (which expresses that I DO NOT LIST) then just be aware of ALL that is expressed, and to whom.

It is hoped that you have signed a Buyer Agency contract with a broker that you know and love.

The Listing Contract is only with the broker himself or herself, it does not bind the whole brokerage. The place is not "listed with ReMax" it is listed with "Joe Lister" and so everyone in ReMax can represent YOU as a buyer agent except, obviously, Joe Lister. The managing broker of ReMax may DESIGNATE which named broker assists which party, and still supervise both brokers in that singular transaction.

However, before we go on from the word "obviously," please let me mention that when I was licensed over a decade ago, the State had adopted a former mechanism whereby we served as "DUAL AGENTS" which is exactly the same as representing both the husband and wife in a divorce proceeding. Since many transactions are concluded "in house" and that is the HOPED-FOR OUTCOME when the listing agreement is signed, the State has legitimized the Broker (we call him or her the TRANSACTION BROKER) whose duties are to the Transaction as opposed to one of the parties (we call the buyers' real representative acting under a written contract the BUYER AGENT, and not a Transaction Broker, ALTHOUGH THEY PAY THE VERY SAME AMOUNT AT CLOSING AS A PERCENTAGE OF THE COMMISSION BEING PAID TO THE LISTING AGENT (and read this next part carefully) FROM THE SELLERS' PROCEEDS but WITH THE BUYER'S PURCHASE MONEY).

Whether you ask Sellers or Buyers, they will both tell you they are paying all of the brokerage commissions, and be right every time. The funds are taken from the Seller's net proceeds at closing, and paid to the Listing Agent, who distributes a percentage portion to a second broker if there is one. The BUYER has brought in ALL THE DOLLARS, every cent, so who is REALLY paying for the commission? naturally I will tell you, BUYERS are, as a portion of the purchase price, and that explains why so many SELLERS are unable to get rid of their places later since the notion is that they will automatically inflate beyond that percentage rate, and that may not be actually the case in Real Life at all, so they can end up stuck very easily in this process.

Upon the advent of Transaction Brokerage, brokers stopped saying I LIKE TO WORK FOR YOU and started saying I WOULD BE HAPPY TO WORK WITH YOU, as a way of expressing whether or not there was a signed Listing or Buyer Contract in force and effect. If you have noticed this change from your friendly broker, that is not your imagination as we do not work FOR you but ASSIST you unless there is a signed contract, and the law keeps us from doing anything else but that.

Please be sure to let me know if any of this confusing information is still unclear, and meanwhile forgive me and yourselves for having to untangle it! however, this is the outcome of the Ralph Nader Age in which Consumers were finally given bargaining strength against the industrial pressure of commerce, and as we have seen in recent times, there is a Finite Value to what we purchase, that results in a false inflationary amount instead, unless it is established on some finite basis. So going next, here is my lecture on that.

INSPECTIONS are built into every Contract for Purchase and Sale, which essentially says the following:

I WILL BUY THIS PLACE AS I CAN SEE AND HAVE BEEN TOLD THAT IT IS! and FOR THE AMOUNT I AM AGREEING TO -- UNLESS IT HAS SOME FLAW that I don't know about yet and/or could not see before. I will personally take on the responsibility for discovering that flaw by the date set forth for INSPECTIONS TO OCCUR and if I don't complain to you about anything by then, then Never Mind about my right to inspect, the place is cool and I will see you at closing with the green stuff in my hand, please have the key and we will bid one-another farewell.

IF IT HAS A DEFECT that I discover during the process of inspections, then I will tell you that I am either bidding you farewell right now because I am totally turned off, ew! or giving you a chance to correct that, according to my AND MY LENDER'S satisfaction, and by the date set forth by the Inspection Resolution Deadline. If we do not agree, our contract will fail and I will expect my earnest money back, otherwise it is a prepayment of the purchase price and assuming all is well, I will see you at the closing and pay you the balance of what I owe under that contract of ours.

YOU CANNOT SELL the place to anybody but me, so long as we have an active contract in place whereby I can buy it if it meets with my approval, and that is what my earnest money represents in this transaction. If the deal is a Go, that money pre-pays the purchase price and only the balance is due at closing (plus title insurance and other things that BuyersAgent may discuss later on, we sure hoped not!) and if the deal is NOT a Go, then it is to be returned to the Buyer or with any excuse for that not occurring being expressed in writing and on time, so that the earnest funds cannot be "stolen" by an uncooperative seller or broker.

Inspections are not just physical improvements, they include zoning, sanitation, title, boundary and ALL OTHER ISSUES that cannot be determined by your standing on the deck. And even those that you can! for instance, are you SURE that driveway is really attached to that deck? ME NEITHER! but I do not represent the Seller so have no information but 100% of the duty to tell you what YOUR RIGHTS and RESPONSIBILITIES are under this contract that I am helping you execute....and the first thing I will tell you is, I know a lot of good attorneys who would be delighted to advise you in connection with this contract -- and still leave your wallet intact, how's that?

In Colorado, under the customary model form of standard Contract, the BUYER CAN FORCE THE SELLER TO SELL while the SELLER CANNOT FORCE THE BUYER TO BUY, BUT CAN ONLY KEEP THE EARNEST MONEY.

A view is GREAT, a solid purchase is more the objective so all those who have had Buyer's Remorse at some point (or know someone who has), please be aware of LIMITED INVENTORY and of the obligations of LIFE you may be assuming by moving forward without ALL your ducks lined up behind their Mom.

Bailey will boom soon! and she will stand on HER REAL VALUE and not what is North or South instead. As some of us are downright committed to our high peaks and valleys, our grand views and horses, and to the Pulse and Heartbeat of Home.


My clients are, blissfully, generally still PUT and happily so, which is the BEST success for any exclusive buyer agent and especially me, loving my Home so much I couldn't wait for others to share it along with me, after all, these Grand Vistas in my eyes are WAY TOO BIG for them, and mine can only see or love so much, as I've learned that even I am a Finite Resource.

Here is how this works out in Real Life:

Broker A (not under contract with prospective buyer): Hey Joe! I see you have that place listed on Elkhorn Drive? I have a buyer and will be bringing them over later, look forward to working with you again, it's perfect for their purposes.

Broker B (exclusive buyer agent or buyer agent under contract): Hey Clients! I know what you're looking for and just saw it a couple of months ago while touring with someone else who couldn't make the move just then. I have NO DUTIES at all to the seller OR ANY OTHER PROSPECTIVE SELLER CLIENTS NEARBY. I thought the place was the bomb when I saw it, but to my eye like everything else, of course it seems somewhat overpriced and a little questionable in a few respects, but I WILL MEET YOU THERE TODAY and we'll see what you think and talk it over OUTSIDE.

This has been my Real Life and I am proud of it, so please notice how it is done: SOMEDAY we will have Seller Agent brokerages, nextdoor to Buyer Agent brokerages, or that is the DREAM for some of us out here. In actual Practice, it is a dual function accomplished in-house and it serves the public with great accolades deserved! except under some economic and social conditions, none of which any licensee can prevent but only respond to within the confines of their own ethical guidelines and against their own economic and other pressures on the other side.

By far the mainstay of area brokers are SO credible that it "speaks for itself" however, this is not the case throughout the state.

(Thanks Kathy)

I did not read the posts above because I already know that we would never buy a property up here without using a buyers agent, specifically Kathy.

A few years ago Char and I wanted to downsize. Char had her heart set on a log cabin. The first one she liked Kathy steered us away because of complicated clouds on the title.

The one we did buy was a bank owned that came on the market by a realtor in Denver that listed it at a deep discount to market. K was johnny on the spot and our offer was in the day it was listed. That same day the bank got 2 or 3 other offers. Apparently others had had their eye on this place for a long time. I recall that K had to schmooze the bank rep to keep it from other agents.

We only had a few days to get the inspections done and K ramroded it through with little pain.

Char loved this place.

Bob, it was an HONOR and a privilege to serve you, and all other Readers here know just what I mean.

I thank you, Sir, and most sincerely so.

As with EVERYTHING in life, if you do NOT have an advocate standing up for you, you are totally
toast in so many ways....health and real estate are two MAJOR investments. One is financial and one is
your bodily well being...can't get more critical than that. It is oh so RARE to find professionals who will
put the client/patient/customer at the TOP of the priority list and follow thru until ALL details are completed AND the client/customer/patient is content with the results. Kathy IS that rare professional.

Thanks dear, I miss you and hope to see you SOON.

I got lucky. The one real estate deal I've done was for the land we're living on now. It was three lots, two of them illegal subdivisions, with an easement right where we wanted to build the house. We had time, and knew we weren't going to build for a while so we thought "what the heck, let's learn about land laws". We took it to the county, and the people at planning and zoning already knew about the area - it was a mess. A year later we had the land rezoned as a planned development, and had the easement eliminated.

We didn't have a buyer's agent. It was stressful, and was a considerable gamble. We happened to win on this one, but I'd never do anything like it again without having a real estate professional on our side.

Ha ha, that does not sound like "getting lucky" but rather "becoming informed" and FIXING the problem, so I send my hearty congratulations!!

I don't think you will necessarily win the Lottery as your "luck" does not seem so terribly great! however, your professional approach was KEEN and so, you probably don't waste your $1.00 on that lucky chance anyway, and for YOU that is a Really Good Bet -- while others really do have to count on that Lottery maybe paying off -- and maybe not.

(gee I love these celebratory icons, ha.)